Gold stocks gain as global prices continue to rise
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The news: Gold prices added to Wednesday's gains today, as the US dollar and bond yields weakened on heightened expectations of September rate cuts in the US.
The numbers: Spot gold rose 0.24% at USD2,391.83 ($3576.89) per ounce, as of 3:05pm AEST, after gaining more than 1% to its highest since 19 April on Wednesday.
In the local market, the materials sector was up 1.34%, lower than the wider market's rise of 1.75%. Gold plays Perseus Mining (5.2%), De Grey Mining (4.4%), Silver Lake Resources (4.3%) and Red 5 (4.4%) made up four of the top 10 performing ASX 200 stocks.
The context: The US dollar fell 0.2% against other major currencies, making the dollar-priced bullion less expensive for other currency holders. The benchmark 10-year Treasury yield hit its lowest in more than one month, Reuters reported.
Odds for a potential September rate cut in the US also firmed — following cooling US consumer prices and softer-than-expected payroll data for April — helping to firm gold prices further.
Local gold stocks were also boosted by the latest labour force data in Australia, which has given some economists extra confidence that rate increases are off the table, with some re-affirming their November cut prediction.
Investors typically buy up gold ahead of rate cuts, as non-yielding assets like gold and silver tend to perform well in lower-rate environments.
The source: Reuters
